AD&C credit tight in Q1, but NAHB index shows pressure easing

"Even so, the first-quarter data marked the 17th consecutive quarter that both the NAHB borrower survey and the Fed lender survey have been in negative territory. For homebuilders and developers, the alignment between the two series underscores that tighter credit is not anecdotal or lender-specific. It has been a broad, cyclical constraint on project pipelines since 2022, even as underlying demand for new homes has remained solid."

Credit conditions for residential land acquisition, development, and construction loans tightened again in the first quarter of 2026, but the pace of tightening was the slowest in four years. The NAHB net easing index for builder and developer credit was -2.7, indicating lenders made it harder to obtain or renew AD&C credit compared with the prior quarter. The index was closest to zero since 2022, following more than three years of sustained stress. The Federal Reserve Senior Loan Officer Opinion Survey showed a similar pattern, with a net easing index of -4.9 for AD&C loans. Both measures remained negative for 17 consecutive quarters, indicating broad, cyclical constraints on project pipelines since 2022. Contract interest rates were mixed, while changes in upfront points affected effective borrowing costs across project types.

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